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200 more job cuts

The number of jobs Eastman Kodak Co. says it is shedding as part of its Chapter 11 bankruptcy ratcheted upward by 200 on Friday.

In paperwork filed with U.S. Bankruptcy Court, Kodak revised the figure of 1,000 positions that it had said on Sept. 10 it expects to eliminate by year’s end. The number actually will be at least 1,200.

Kodak previously cut 2,700 jobs worldwide since the beginning of the year. The total of 3,900 represents 23 percent of the company’s global workforce and will save Kodak $340 million a year.

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Eastman Kodak Co., struggling with a film business on the skids, pumping billions into new enterprises that hopefully would become its future and saddled with huge retiree expenses, had a plan.

File for bankruptcy and use the protection of Chapter 11 as an opportunity to shed a lot of those costs, the thinking went. Sell a mound of 1,100 digital imaging patents valued at potentially billions of dollars. And come out of it all a leaner company focused on commercial printing, packaging printing, desktop inkjet printers and a variety of print-related services.

But eight months into the bankruptcy, that plan has all but fallen apart.

The iconic company on Friday said it would quit making desktop inkjet printers and focus on churning out ink for the millions of printers it already has sold.

That abrupt about-face comes after Kodak has spent nearly a decade and many hundreds of millions of dollars to create the printers, which it started selling in 2007. Now the printers will join other Kodak operations, such as retail store photo kiosks and document scanners, that within the past few weeks quickly went from being part of the company’s future to a once-was.

In place of desktop printers, Kodak has said “functional printing” — using printing technology as a way of manufacturing everything from circuit boards to flat batteries — will be key to its post-bankruptcy plans.

The shuttering of the printer business comes as no surprise given that Kodak’s so-far failed attempt to sell the 1,100 digital imaging patents “is killing them,” said Charles LeCompte, a senior analyst with imaging industry research firm Photizo Group. “They can’t afford to hold on to this business.”

The patent auction, now in limbo, likely is also behind a motion Kodak filed Friday in U.S. Bankruptcy Court asking for four more months to come up with a reorganization plan, said John C. Ninfo, retired U.S. bankruptcy judge for the Western District of New York. Such plans, which ultimately have to be approved by the court, spell out how a company will operate after emerging from bankruptcy and what steps it will take to repay its creditors as much as possible.

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The lack of a patent sale “has obviously changed the game as to the terms of a possible (reorganization) plan,” Ninfo said. “Given Kodak’s continuing inability to be profitable and its seemingly ever-changing business plan, negotiations with creditors to get to a consensual plan, rather than an orderly liquidation, are going to be difficult and require more time.”

Currently, Kodak has only until Oct. 15 for putting up such a plan before competing interests — such as creditors who might want to see Kodak liquidated and sold off — can float their own plans. In its motion, Kodak is asking for an extension to Feb. 28.

“It is very common in large and complex cases for multiple extensions to be filed,” company spokesman Christopher Veronda said Friday. “There are things like the asset sales that will take time. It’s important to note that the timeframe for emergence — the first half of 2013 — has not changed.”

An analyst hired by Kodak had estimated the patents could be worth as much as $2.4 billion. The patent auction began in August and its conclusion has been delayed repeatedly, seemingly indicating that bids fell short of what Kodak wanted, though the company has declined to discuss specifics of the bidding.

Kodak’s home printer coda comes as the small office/home office printer world is in increasingly tough straits. Lexmark International Inc. announced in August plans to quit making inkjet printers. And the consumer printer businesses at both Hewlett-Packard Co. and Seiko Epson Corp. have been struggling, said LeCompte.

Kodak’s All-in-One printer line focused on a particular market of people who do a lot of home printing of photos. But that niche group more often looks at photos on computer screens, gets prints from retailers such as drugstores, or has them printed in photo books, LeCompte said.

“In general, people aren’t doing four-by-six prints and photo albums the way they used to,” he said. “The home photo printer market is just disappearing.”

Kodak has long talked about how the profits in the business are from the consumables, such as the ink. Getting out of the printer hardware business “will significantly improve cash flow in the U.S. beginning in the first half of 2013,” the company said.

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The inks used in the printers are manufactured at Eastman Business Park.

With Kodak winding down sales of the printers in 2013, LeCompte said Kodak’s inks business would have perhaps three years of life in it without any new printers coming onto the market.

Kodak and Samsung Electronics in April announced a partnership of Samsung-made home printers that use Kodak-made inks and Kodak printing technology being rolled out in Europe. Veronda said Friday that Kodak is working to meet its contractual obligations.

With CEO Antonio M. Perez coming to Kodak after a long career at Hewlett-Packard, “He certainly must understand the technology of inkjet very well, but his understanding of the business issues he would face by attempting to compete with well-established and well-funded players may have been weaker,” said Kodak retiree Terry Faulkner, who in the late 1990s advised former Kodak CEO George Fisher on corporate strategy.

Given the business trends Kodak has been facing for years, Faulkner said, “I suppose that one might argue ... it is reasonable to undertake a high-risk, long-shot effort in consumer inkjet. I disagree.”

Faulkner, who said he thinks a Chapter 7 liquidation of Kodak is inevitable, said forays into consumer inkjet “are a squandering of the limited resources remaining within Kodak. At the end there will be little, if anything, left over for creditors.”